Home / All CMS Expert Guides / CMS Expert Guide to labour law in Central and Eastern... /
Bosnia and Herzegovina - Federation of Bosnia and Herzegovina (“FBiH”)

Labour law in Federation of Bosnia and Herzegovina (“FBiH”)

1. Hiring workers

 

1.1. Employment contracts

Written form or written confirmation

The employment relationship is based on the employment contract, which must be concluded in written form and in accordance with the Employment Law of the Federation of Bosnia and Herzegovina (“Official Gazette of FBiH, no. 26/16 and 89/18). The employer is obligated to deliver a copy of the agreement to the worker prior to the commencement of employment.

Presumption of open-ended employment

If no fixed duration is stipulated in the contract, then it is presumed to be an open-ended agreement. Moreover, if a worker explicitly or implicitly extends the fixed term employment contract with the same employer or concludes consecutive fixed term employment contracts with the same employer for a period longer than three years without interruption, then such contract is considered to be an open-ended contract.

Necessary content

An employment contract must include the following:

  • name, surname and addresses of the contractual parties; 
  • anticipated duration of employment (if employment is for a fixed-term);
  • date of commencement of employment;
  • place of work or reference to several places of work;
  • nature of work and short job description;
  • average weekly and daily working hours;
  • basic salary and bonuses (including payment date); 
  • holiday entitlement or method for calculating holiday;
  • period of notice, or method for calculating notice period; and
  • other data regarding the working conditions, in accordance with the collective agreement.

Fixed term employment contracts may only be concluded for a maximum period of three years

A fixed-term agreement can only be negotiated for a maximum period of three years. It is not possible to get around this by either (i) prolonging a fixed-term agreement with an employer (whether explicit or implied); or (ii) concluding several new fixed-term agreements on a consecutive basis that exceed an overall duration of three years – such employment becomes in these instances an open-ended employment relationship.

Probationary period

If the parties stipulate a probationary period, it may not be for more than six months and must include a notice period of at least seven days.  

Choice of law

All employment contracts in the Federation of Bosnia and Herzegovina are governed by the employment law of the Federation of Bosnia and Herzegovina (with the exception of foreign diplomats). 

Legal venue 

With regard to contractual and statutory rights and duties, it is not possible to exclude the jurisdiction of local courts.

 

1.2. Service contracts

If a service provider becomes involved in the customer's business operation

Services may also be provided within the framework of a service agreement i.e. where a contractor commits to providing services in exchange for remuneration. These services may include carrying out specific repairs. However, a service agreement such as this may not be used to avoid adhering to the provisions contained in employment law. As such, if a service provider is involved in the operation of a customer's business and becomes subject to their directives while carrying out the designated “work”, this results in the creation of an employment contract and the term “service agreement” no longer applies.

 

1.3. Employment of foreign citizens

Right of residence and employment of foreign nations

In accordance with the BiH Law on Foreign Nationals  (“Official Gazette of FBiH”, no. 111/12), the BiH Law on Foreign Nationals  (“Official Gazette of BiH” no. 88/15) and the Rulebook on Entrance and Residence of Foreigners (“Official Gazette of BiH” no. 25/16), a foreigner who intends to reside in BiH in order to undertake paid work, may only start working in Bosnia and Herzegovina based on a work permit once his/her residence permit is approved. In such a case, an employer cannot conclude an employment contract or other corresponding contract before the foreign individual’s temporary residence has been approved, nor can this foreign individual start his work before his residency has been approved. In addition to general legal preconditions and the conditions contained in the collective agreement or employment rulebook, the foreign individual must possess a work permit for the conclusion of an employment contract

Work permits

Also, the BiH Law on Foreign Nationals sets out employment for which a work permit is not necessary. In these cases the foreigner regulates his residence based on highly qualified employment, transfer within a legal entity, scientific research or work without a work permit with a certificate on registration of work. The certificate for the registration of work  can be obtained under conditions and for a period prescribed by the BiH Law on Foreign Nationals for specific occupations and types of work, such as members of supervisory boards and founders of companies, persons who carry out delivery work and assemble equipment, university professors, scientists and researchers hired by universities in BiH. The procedure for obtaining of certificate for the registration of work is simpler than the procedure for obtaining a work permit as it requires significantly fewer documents to be submitted to the competent authority. Furthermore, university professors, scientists and researchers hired by universities in FBiH and foreign military personnel who participate in joint projects with the BiH Armed Forces in BiH are not required to obtain work permits. Foreign journalists and reporters as well as artists, authors, actors, singers and others participating in cultural events are not considered to be workers and are thus exempt from obtaining work permits. 

Upon being informed how many foreigners need to be employed in a certain capacity, the federal employment bureau submits the information on the number of necessary work permits for foreigners to the relevant ministry. The annual quota of work permits is determined based upon this. When meeting the annual quota, extending current work permits has priority over issuing new permits. Work permits are issued at the request of the employer who must, inter alia, submit a justification for employing a foreign citizen. Requests for work permits will be denied if there are persons registered at the Employment Office with adequate qualifications, except for employers who are foreign investors or founders of a local company whose employees can be granted a work permit regardless of whether there are persons with adequate qualifications registered at the employment office. Work permits are issued for a specific work position and type of work and are issued for a maximum period of one year. Work permits are not transferable between different work positions or employers.

Once the employer obtains the work permit, the foreigner must obtain a valid temporary residence permit based on the approved work permit, in accordance with the provisions of the BiH Law on Foreign Nationals. As stated above, the worker may only start his work after obtaining an approved residence permit.

>> Go to the top


2. Remuneration

 

2.1. Minimum Wage

Minimum wage pursuant to collective agreements or employment rulebook

In principle, the parties are free to agree upon such terms as basic salary, possible bonuses and benefits. However, the minimum wage stipulated (either generally or specifically) in the applicable collective agreements or employment rulebook (as decided upon the relevant employer) must be considered. The Economic-Social Council of the FBIH determines the minimum wage for the territory of the Federation of BIH no later than the 1st December of the current year for the following year. In determining the minimum wage, the Economic-Social Council of the BIH has to consider the increase or decrease of the GDP and the inflation of the national currency. 

 

2.2. Pay raises

Legal basis

Pay raises can be negotiated at either the level of a collective agreement or an employment contract as well as in the employment rulebook that has decided upon by the employer. However, a general point of reference for all employers does not exist.

 

2.3. Pay reduction

Only possible with the consent of the worker

In principle, employers can implement changes to salary or working conditions with the consent of the affected worker. 

Altering terms and conditions of employment

Alternatively, in order to amend a worker´s terms and conditions of employment, an employer may terminate the existing employment contract under the conditions of, and in accordance with, the mandatory legal provisions on the termination of employment contracts. They may then re-offer the worker a new employment contract under altered conditions. In any event, the minimum wage stipulated in the applicable legislation, collective agreements or employment rulebook (as decided upon by the relevant employer) must be considered. A worker’s refusal to accept the conditions offered in a new employment contract does not represent a valid reason for termination in itself. Furthermore, if the worker accepts the employer’s offer then he retains the right to dispute the permissibility of such amendments to the employment contract before the competent court, in accordance with the applicable law.

>> Go to the top


3. Working hours

 

3.1. Regular working hours and breaks

Regular daily and weekly working hours

A standard working week consists of 40 hours. 

Break time

Full-time workers are entitled to a daily 30-minute break. However, this does not count toward their working hours.

 

3.2. Statutory minimum periods of rest

Minimum daily periods of rest

The minimum daily rest period for workers is at least 12 hours over the course of two consecutive working days. This period may be reduced to 10 hours for seasonal workers of the appropriate age.

Weekly rest periods

Furthermore, workers are entitled to a weekly rest period of at least 24 hours, which is generally granted on Sundays. However, if a worker is required to work on his rest day (for operational reasons), he is entitled to an alternative day of rest within a time period negotiated between himself and the employer.

 

3.3. Maximum weekly working hours

52 hours

Irregular working hours must be justified by operational necessity. If this can be justified, then working hours may amount to 52 hours per week averaged over a certain period.

Seasonal work

Exceptions apply for seasonal workers, who may work for up to 60 hours under certain conditions for a number of weeks.

 

3.4. Overtime

General principles

Workers must work overtime upon demand if it can be justified by one of the following reasons:

  • force majeure;
  • an unusually high work load; or
  • for other unanticipated reasons

Limitations

In the above stated cases, the worker may work up to 8 hours of overtime per week.

Notification to labour inspection office

If a worker works overtime for three consecutive weeks or a total duration of ten weeks in one calendar year, the labour inspection office must be notified.

Prohibition of overtime

Minors cannot work overtime under any circumstances.

Instruction to provide overtime based on written agreement

The following occupational groups may only work overtime upon their explicit, written consent:

  • pregnant women;
  • mothers with children aged 3 years or younger; and 
  • single parents with children aged 6 years or younger.

Compensation for overtime

Workers are entitled to an increased salary for working overtime. 

Permitted in principle

In principle, work on weekly rest days and holidays is permitted. However, the worker must be paid a higher rate of pay for any work carried out on these days. 

 

3.6. Increase of salary for other additional efforts

Hard labour and night work

A worker is entitled to increased basic salary for more difficult work conditions (noise, moisture, dust, dark rooms, hard labour and other similar cases) as well as for work where strict safety measures apply. This increase is determined in industry-specific collective agreements for individual industries and business activities whilst taking into account the specifics of every industry. Also, a worker is entitled to an increased salary for night work in accordance with the law.

>> Go to the top


4. Holiday

Holiday entitlement

Workers are entitled to at least 20 working days of paid holiday per year, but a maximum of 30 working days of paid holiday per year. Exceptionally, holiday may last longer than 30 days if so provided by collective agreement and in accordance with the nature of job and work conditions. Holidays do not include any time spent temporarily unable to work, non-working holidays or other leave from work which is recognised as insured service years for the worker. 

Increased holiday entitlement

Minors are entitled to at least 24 days of holiday per year.

Accrual of holiday entitlement

When employed for the first time or after a period between jobs lasting longer than 15 days, a worker will acquire his holiday entitlement after 6 months of continuous employment. If the worker is not entitled to full holidays, he is entitled to at least one day of holiday for every month of completed work, in accordance with the collective agreement, employer’s rulebook on employment and the employment contract.

Use of holiday

A worker may take his holiday in two parts, where the first part must be of at least 12 consecutive days in the calendar year for which the annual leave is granted.

Remuneration

The worker is entitled to paid holidays. In addition, remuneration for using holiday days is specified by the collective bargaining agreements or employment rulebook.

Payment in lieu of holiday

An agreement to waive the right to take annual leave or for the employer to provide payment as compensation for not taking annual leave shall be void. A worker can receive monetary compensation for not utilising his annual leave if the worker fails to exercise his right to annual leave due to the employer’s fault, e.g. if the employer denies the worker’s request for an annual leave.

Remaining holidays

If a worker does not use their accrued holiday entitlement within the respective calendar year, the remaining leave can be carried over but must be used by 30 June of the following year.

>> Go to the top


5. Illness/Absence from work

Duty to notify employer and provide medical certification

If a worker is absent from work due to an illness or accident, he must inform the employer in writing within three days from the start of his absence and, upon the employer’s request, provide a medical certificate to the employer. The certificate should confirm the worker´s inability to work and state the anticipated length of time for which they will be absent from work. 

If, for reasons beyond his control, a worker is unable to notify his employer or provide verification of his illness, then he must fulfil the proper procedure as soon as he is able to do so. 

Entitlement to continued remuneration

A worker is entitled to remuneration of salary during temporary inability to work caused by sickness or injury or other reasons provided for by the Law on Health Insurance (“Official Gazette of FBiH”, no. 30/97, 7/02, 70/08, 48/11, 100/14 and 36/18). A worker has the right for salary compensation during sick leave taken due to sickness, injury or childcare and has a right for salary compensation from the first day of his/her sickness until a day when a competent doctor determines that the worker is capable of work.
Salary compensation during sick leave amounts to (at least) 80% of the salary paid to the worker in the month preceding the month in which the worker became sick. Also, salary compensation amounts to 100% of the salary during sick leave for injuries at work, for diseases related to pregnancy or birth or for organ transplantation.

Duration of entitlement to continued remuneration

The employer pays salary compensation for the first 42 days of sick leave. After 42 days the employer also pays salary compensation to the worker, but the employer has the right to a refund from the competent health insurance fund.

Worker’s duty of disclosure

A worker’s duty of disclosure is not specifically regulated but in practice, an employer may, in order to satisfy general pre-conditions for employment, request to see evidence of the worker’s health condition through medical certificates and a certificate of ability to work.

>> Go to the top


6. Termination of employment

General information

An employment contract may be terminated by:

  • the death of the worker;
  • on the mutual consent of the employer and worker;
  • when the worker is 65 years old and with at least 15 years of work with paid pension benefits (in accordance with regulations related to pension-invalidity insurance), unless agreed otherwise by employer and worker;
  • when the worker has worked for 40 years with paid pension benefits (in accordance with regulations related to pension-invalidity insurance), regardless of age, unless agreed otherwise by employer and worker;
  • declaration of invalidity by the competent authority;
  • termination with notice (ordinary) by employer;
  • termination without notice (summary dismissal) by employer;
  • termination by employee;
  • the lapse of time (in the case of a fixed-term employment);
  • if a worker is sentenced to prison or is subject to a safety or protective measure for more than three months; or 
  • a final and binding court decision terminates the employment.
 

6.1. Formal requirements for the employer

Written form and reasons for termination

If the employer wants to terminate the employment relationship, it must do so in writing and should state the reasons for the termination. Non-compliance with these requirements may result in the termination being invalid.

 

6.2. Periods of notice

At least 7 days (for the worker) or 14 (for the employer)

The minimum notice periods for termination of an employment contract are at least 7 days for the worker and 14 days for the employer. Furthermore, the notice period for probationary work is at least 7 days, as per the applicable law.

Entitlement to remuneration during the notice period

During the notice period for termination of employment, workers are entitled to full remuneration and all other statutory rights.

 

6.3. Dismissal without notice

Serious breach of duty

The employer may terminate the employment contract without notice if the worker is liable for a serious breach or serious breach of work obligations from the employment contract, and if said breaches are of such nature that the employer cannot be expected to continue the employment relationship. In case of less serious breaches of employment obligations, the employer cannot terminate the employer’s employment contract in writing without giving a prior warning.

Promptness

If there is a valid reason for a summary dismissal, the worker must be dismissed within 60 days, but no more than one year from the day of learning about the fact causing dismissal.

 

6.4. Causes for dismissal

Termination by employer 

Employers may only terminate a worker’s employment contract in accordance with the reasons given in the applicable law.

Reasons for termination

The employer may terminate an employment contract under the prescribed notice period in cases where: 

  • termination is justified due to economic, technical or organisational reasons (in this case the employer may terminate the employment contract if, taking into account the size, capacity and economic condition of the employer and the worker’s capabilities, it cannot be reasonably expected from the employer to give the worker other jobs or educate or equip him for work in other jobs); or
  • the worker is not capable of carrying out his employment contract obligations.

Possibility of continued employment

An employer may only terminate the employment contract of a worker who has reduced working ability or who is at immediate risk of disability with the previous consent of the workers’ council or trade union.

 

6.5. Mass redundancies

Definition

If an employer employing a minimum of 30 workers intends to terminate the employment contracts of at least 5 workers for economic, technical or organisational reasons within the period of the next three months, then this represents “collective redundancy”.  
In these circumstances, the employer must consult with a workers’ council or trade union.

 

6.6. Severance pay

2 year term

If a worker who concludes an employment contract for an unlimited duration and this contract is terminated by the employer after a minimum of two years of continuous work (except if the contract is terminated due to breach of employment obligations or non-performance of employment obligations by the worker), then the worker is entitled to severance pay to an amount depending on his years of continuous employment with that employer. Severance payment is determined based on the collective agreement, employment rulebook or employment contract, but it cannot be an amount lower than one-third of the monthly average salary paid to the worker within the last three months prior to termination of the employment contract for every year of service with this employer. The severance payment may not exceed six average monthly salaries paid to the worker in the last three months before the termination of the employment contract.

 

6.7. Special dismissals protection

Groups protected against dismissals

In FBiH, workers who belong to the following groups may not be made redundant:

  • pregnant women, parents during maternity/paternity leave, as well as parents of disabled children on care leave; and
  • workers who have suffered an injury at work or have become ill with an occupational disease and are incapable of working.

Termination only permissible with the approval of the federal ministry of labour

For the duration of their union activity as well as for six months thereafter, union members may only be dismissed with the permission of the federal ministry of labour. 

 

6.8. Alteration of occupational circumstances

 

Altered occupational circumstances of a worker such as changes in working ability due to an injury at work or a work-related illness cannot damage the rights of a worker as arising out of an employment contract. If, after appropriate treatment, the worker is declared as fit for work then he is entitled to return to perform the jobs which he performed prior to his inability to work or do other jobs corresponding to his occupational circumstances, meaning work ability. If the relevant medical institution determines that the worker possesses decreased working capabilities or there is a direct danger of disability, the employer is under a duty to offer to him in writing other jobs which the worker is fit to do. This worker is entitled to an advantage in terms of competency education, training and further schemes to improve performance, as organised by the employer. An employer may only terminate the employment contract of a worker with reduced working capabilities or who is in direct danger of becoming disabled with the prior written approval of the workers’ council or trade union.  

>> Go to the top


7. Transfer of operations

Transfer of employment relationships upon consent of the personnel

If a business is being transferred, the employment contracts of the workers working for the business will also be transferred. That is to say, all rights and duties from the employment relationship between the transferring employer and the workers are adopted by the receiving company upon the consent of the workers. 

The receiving employer shall assume all the rights and obligations arising under the transferring contracts and must observe all acquired rights of the workers. 

>> Go to the top


8. Co-determination rights

 

8.1. Unions and business management

Freedom to establish and join a trade union

In FBiH, all workers are entitled to freely establish or join a trade union of their choice under the conditions prescribed by the law. 

Union representatives in the company

The unions are free to decide how they wish to represent the rights of their members in a specific company. As a general rule, one or more union members are elected as representatives. 

Statutory competence

Unions and their members are entitled to the following:

  • attend appropriate training seminars during working time and entitlement to paid leave;
  • employment rulebook: Right to comment and right to challenge the introduction of such rules before the court (in the absence of a workers’ council);
  • elect members of a workers’ council: right to introduce workers’ council election procedures;
  • in the absence of a workers’ council, the right to practice certain rights that are otherwise undertaken by a workers’ council;
  • expand the competency/scope of a (foreign) collective bargaining agreement: right to comment;
  • examinations by the labour inspectorate: the right to initiate such inspections;
  • strike: right to initiate a strike; and
  • as parties to collective bargaining agreements, unions also represent the rights and interests of workers.

Collective agreements

Aside from these statutory rights, the influence of unions undoubtedly depends on their ability to negotiate collective bargaining agreements with employers.

Strikes 

In FBiH, as a general rule, strikes or other means of influencing business management may be undertaken by trade unions or workers’ councils, as long as all rights and duties pursuant to collective bargaining agreements and other agreements are observed.

Power of unions

Furthermore, the influence of union and workers’ council is generally strongest in large companies and public enterprises.

 

8.2. Statutory personnel representation 

Workers’ council

In companies with at least 30 workers, a workers’ council can be established after a request for this from a trade union or by at least 20% of the workers. The purpose of a workers’ council is to represent worker´s interests and communicate their views to the employer. The establishment of workers’ councils, as well as all other matters such as their work, tasks and rights, are regulated in the Law on Workers’ Councils. 

 

8.3. Collective agreements

Collective agreements and workers’ council agreements

Collective agreements are negotiated between unions and employers or employer representation associations. No statutory provisions regarding workers’ council agreements exist.

Employer´s duty to implement the terms of agreement

A collective agreement can be signed at the level of the entire FBiH, for a certain profession, or for one or more employers. Generally, a collective agreement is only binding on the parties that have signed up to it. However, the competent Ministry of Labour may decide to expand application of collective agreements to parties that have not signed it. The general collective agreement is signed for the entire territory of FBiH and is also binding on all FBiH employers.

>> Go to the top


9. Disputes in courts of labour

 

9.1. Disputes in courts of labour

Ordinary courts

Ordinary courts are generally responsible for deciding employment-related disputes. No labour courts currently exist in the FBiH.  

Arbitral courts

Employment-related disputes can be arbitrated, as long as the parties (employer, workers/unions) agree, or have agreed upon this in advance (i.e. in employment or collective bargaining agreements). 

 

9.2. Competency disputes

Arbitration boards

Disputes concerning the conclusion, implementation, adaptation or extension of collective bargaining agreements or other collective disputes which may lead to industrial action must (before respective measures are taken) be discussed in front of an arbitration board (“peace council”), unless the parties agree otherwise.

Composition

The “peace council” consists of three members: one union representative, one employer association representative and one member from a ministerial federal or cantonal list, as mutually nominated by the above.

Economic-Social 
Council

The Economic-Social Council was founded based on an agreement passed between representatives of FBiH, representatives of the unions and representatives of the employer representation associations.

>> Go to the top


10. Social insurance charges

General

The social insurance system in the FBiH covers the following risks: motherhood, age, illness, invalidity and unemployment.

 

10.1. Social insurance charges and taxes

Social insurance

Social insurance charges are calculated based on monthly salaries and include the following:

  • Retirement insurance: 6.00 %(Employer) and 17.00 % (Worker)
  • Health insurance: 4.00 % (Employer) and 12.50 % (Worker)
  • Unemployment insurance: 0.50 % (Employer) and 1.50 % (Worker) 
 

10.2. Health insurance

Basic and additional insurance

In FBiH, health insurance consists of basic (mandatory) insurance and an additional (optional) insurance. The basic insurance includes benefits in kind (such as medical care) as well as financial cover (such as sick pay).

Private health insurance

Aside from the governmental system, private health insurance may also be claimed. However, charges and benefits depend on the insurance agreement that the worker has signed up to.

 

10.3. Retirement pension insurance

Single level retirement 
and accident insurance

In FBiH, the “classic” single level, i.e. statutory, public and mandatory retirement and, applies.

Premature and full old-age pension

The right to an old-age pension arises at the age of 65, provided that the worker has paid 15 years’ worth of insurance premiums (premature retirement), in accordance with regulations related to pension-invalidity insurance, unless agreed otherwise by employer and worker. Otherwise, the worker can retire at any age after paying 40 years’ worth of insurance premiums (full old-age retirement), in accordance with the regulations related to pension-invalidity insurance, unless agreed otherwise by employer and worker.

Calculating old-age pension

The amount of old-age pension granted is calculated with reference to the number of months for which the worker has paid insurance and the amount of insured income. 

 

10.4. Unemployment benefit schemes

Cash benefits and programs

The government combats unemployment through numerous labour market policies and supports the unemployed through cash benefits.

Unemployment benefits

Unemployed persons who, at the moment of termination of their employment, have worked and paid contributions into the unemployment scheme for at least eight consecutive months or eight months with interruptions in the last 18 months are entitled to unemployment benefits.  Unemployment benefits amount to 40% of the average net salary over the last three months prior to unemployment, depending on the region and the number of months or years for which they were insured. The duration of payment depends on the number of months or years for which they were insured and generally amounts to 3-24 months.

>> Go to the top


This brochure merely offers general information and can under no circumstances replace, represent and be relied on as legal advice.

Please note that despite diligent handling, all information in this brochure is provided without engagement and any liability of the author or publisher is hereby explicitly excluded